Big Mac, Big Trouble
The Independent (UK) - 14 November 2000
It was supposed to be the start of a beautiful McFriendship. When the world's hungriest hamburger chain opened its first branch in Moscow, a new golden age of east-west relations was predicted. But 10 years on, the dream has gone stale
By Patrick Cockburn
Natalya Gracheva thinks that she is being watched. She works in the security section of the McDonald's food-processing plant known as "McComplex" on the outskirts of Moscow. Part of her job is to watch what staff are doing on television monitors, but two years ago, after she started a trade union at McDonald's, she claims one television video camera was trained permanently at her back. "They are waiting for me to make a small mistake in my work", she says. "I wouldn't be surprised if they sacked me tomorrow."
Gracheva, a bubbly 40-year-old woman, sounds alternatively amused and frightened by her experiences since she formed the union at McDonald's in the wake of the Russian financial crash of 1998. She remembers that when she first joined McDonald's, a few months after it opened its first restaurant in Moscow in 1990, the slogan of the company was: "We are a united family and we will survive everything together." But when the Russian economy crashed, she claims McDonald's workers found their real wages in roubles had dropped significantly - some say by up to seventy per cent.
Until then, working for McDonald's, which today has some 58 outlets in Russia, was a prestige job in Moscow. Its 700-seat restaurant just off Pushkin Square served 50,000 people a day and was a highly publicised symbol of Western capitalism in the heart of the former Soviet Union. Street photographers who used to take pictures of Soviet tourists visiting Lenin's tomb in Red Square moved to the street outside McDonald's, where they photographed customers embracing a wooden cut-out of Boris Yeltsin with the famous yellow "M" of the restaurant in the background.
This week, the McDonald's in Pushkin Square, decorated with models of European landmarks including Big Ben and the Eiffel Tower, was full - though not packed - with young Russians paying 12 roubles (30 pence) for a hamburger and 14 roubles for a cheeseburger. But the company has lost its old allure in Moscow, which 10 years ago led to 27,000 Russians applying for a single job and queues half a mile long outside its biggest restaurant. Instead, McDonald's is acquiring a much less favourable image among Russians for paying low wages by international standards - one waiter at Pushkin Square said he earned 17 roubles (43 pence) an hour - and for what some people see as union busting.
The economic collapse of 1998 mortally wounded hopes among ordinary Russians that free market capitalism would improve their standard of living. Gracheva says the mood among the workers at McComplex changed overnight when they discovered that they had to accept McDonald's American-style work discipline, but were no longer paid such high wages to compensate. "It was a revolutionary situation", she says. "As their pay shrank, people lost their fear of being sacked."
Workers who joined Gracheva's union claim they then came under intense pressure from management to leave. One of them, Yevgeny Druzhinin, a forklift truck driver, appeared in court last month over claims by McDonald's that he had broken an expensive piece of machinery. For his part, Druzhinin argued that the accusations were fabricated to punish him for his union activity. The judge made no link between Druzhinin's union activity and the disciplinary action taken by the company against him - but the court decided that he was not, after all, responsible for the breakage as McDonald's alleged.
Soon after the decision, the Duma - the Russian parliament - summoned the McComplex workers before a special committee. The McDonald's management refused to attend. If they had been present, they would have heard Druzhinin tell the committee that: "A security officer hinted that I might be preparing an act of terrorism. He told me: 'You create too many problems. I'll have you put in prison.'" Druzhinin also claimed that the security officer is a former member of the KGB. Shortly after this threat, again according to Druzhinin, he was summoned to a local police station and told to keep his mouth shut if he wanted fewer problems with the McDonald's management.
Innokenty Dukhovlinov, who worked in the food freezing department, told the parliamentarians: "Look, we have to work an hour in our freezer shop, where the temperature is minus 26 degrees [centigrade] and we have only five-minute breaks to warm up. One of our colleagues got frostbite on his penis. We regularly get ear infections." Dukhovlinov said that when he complained to a McDonald's personnel officer: "She told me flatly that I am alone and that she has the whole organisation behind her."
Kirill Buketov, a representative of the Geneva-based International Union of Food and Allied Workers in Russia, says it is indicative of McDonald's' priorities that the company appeared fearful of union power. "It spends $2bn a year building up its image", he says. "But it sees unions, which might raise the pay of its low paid workers, as a real threat to its profits."
Natalya Gracheva says that her dealings with McDonald's remind her of the way the Soviet Union used to work. "It operates like a totalitarian state with its own laws and its own measures", she says. She told the parliamentary committee that some of the managers working for the Russian McDonald's - its parent company is McDonald's of Canada - have said to her that they have been told to get rid of the union, or face the sack themselves.
In theory, McDonald's should be in a strong position. The union is tiny. Gracheva says that there are just 17 paid-up members out of a workforce of 450, though she claims that "most of the workforce are sympathetic to us but are concerned that it will become known that they are active in the union". The union members are all in the food-processing plant, while those in the restaurants, though paid very little, are too young and change jobs too often to become organised.
Russians also have little experience of unions which carry out collective bargaining with the management. In the Soviet Union every worker was a member of a union, but these largely confined themselves to organising holidays and childrens' camps. Gracheva says people are simply scared: "They don't know if tomorrow our leaders may not say that unions are terrorist organisations. Anything can happen in our country."
She says that even now she feels this undercurrent of fear in herself: "I remember when I was seven years old I saw Brezhnev at the rostrum on TV. A few days before I had seen picture of the Tsar giving a speech. I asked my mother if there was any difference between the two since they both seemed to live pretty well. My mother was terrified. She told me: 'Never, ever repeat what you have just said to anybody at school or anywhere else.'"
McDonald's in Moscow did not reply to repeated telephone calls over several days from The Independent asking the company to state its position on its struggle with Gracheva's union. However, late yesterday afternoon, McDonald's Russia said that the overwhelming majority of McComplex staff supports the current employment practices. McDonald's says working conditions far exceed those required by Russian employment law, and that they will now begin negotiations with the union. But their initial reluctance to comment was in sharp contrast with the company's early days in Moscow, when it was happy to pump out facts and figures about its efforts to provide fast food to Russians at low prices.
Not all of this was just self-promotion. George Cohon, president of McDonald's of Canada, spent 14 years trying to enter the Soviet Union before he opened his first restaurant in Moscow in 1990. As early as 1976 he was providing a free McDonald's bus to a Soviet delegation attending the Montreal Olympics in the hope of pressing his case with officials.
Once established in Russia, McDonald's made strenuous efforts to Russify its operation. It bought its meat, potatoes and lettuce in Russia. It was in a joint venture with Moscow city government, which still owns 20 per cent of the company. Many other foreign companies operated in hard currency, but McDonald's operated in roubles and at prices ordinary Russians could afford. It hired and trained a largely Russian management team, in contrast with other foreign companies which rely on expatriate staff. However, one of the causes of the explosion of anger among workers at the McComplex in 1998 was that their wages collapsed with the rouble, while the salaries of senior managers were calculated in dollars and held their value.
Kirill Buketov believes that McDonald's has miscalculated the growth in public hostility towards the company in Russia, where it is no longer seen as a symbol of free enterprise. He thinks it will have to negotiate with Gracheva. There are signs he is right. At the weekend the Russian Duma threatened McDonald's with an audit of all its enterprises and requested the prosecutor to investigate how its managers decide how much workers are paid. Gracheva says this is the third time that the company has promised to negotiate.